Elliott Wave Analysis of the S&P-500 (SPX) by Sid from ElliottWavePredictions.com. Click on the chart twice to enlarge.

The SPX index is at a very important crossroads. Typically, after an extended 5th wave within an impulse, the following correction will seek the extreme of wave 2 within the extended 5th wave. In the SPX, that target has been at 1345. If wave 2 black is carving out an expanded flat, wave “B” has bounced (slightly) off the 1.382 target, where wave “B” of the flat is 1.382 times the length wave “A” was. If the US markets can rally into the close today without finding new lows, an expanded flat for wave 2 black is still firmly on the table, as depicted in the chart above. If the market falls hard through the 1282 level, it is more probable that wave 2 black ended on May 29, and wave 3 black to the downside is already underway, with an initial conservative target of 1211, where wave 3 black would be equal in length to wave 1 black. Please note that it is far more typical for a wave 3 to be 1.618 or 2.618 times the length wave 1 was.

If the market can rally back to the 1345 level, it will likely be driven by jawboning about QE3.

Another item to look for this weekend is potential Bank of Japan intervention in the USD/JPY pair. It appears that they may have stepped in shortly after the NFP release this morning with a shot across the bow of shorters.

Have a great weekend . .